NEW YORK (AFP) Apr 06, 2004The US Air Force is preparing to end an eight-month suspension on Boeing Co. bidding for government rocket contracts, the Wall Street Journal said Monday.

Air Force and Boeing officials expect to announce an agreement in the next few weeks that paves the way for the number two US defense contractor to resume bidding for contracts valued at up to five billion dollars up to 2010, the daily said, citing confidential sources.

The Air Force stripped Boeing of one billion dollars in launch contracts and suspended three of the company's units from bidding on new rocket business in July 2003, over an industrial espionage scandal.

Officials took the step after concluding that Boeing improperly came by thousands of pages of documents from rival Lockheed Martin Corp., that gave Boeing an unfair advantage in the bidding process for a rocket launch contract.

Under the deal reported by the Journal, Boeing will pay the costs of the Air Force probe into the espionage affair, estimated at several million dollars.

It will also implement ethics programs and provide regular updates to the authorities on compliance efforts, the Journal said.

The report comes as senior Boeing officials work to repair rifts with the Pentagon and lawmakers following a series of scandals that have rocked the company, and either cost it or jeopardised lucrative government contracts.

A Boeing spokesman confirmed that the two sides had been negotiating an agreement to have the suspension lifted, but would not comment on specifics.

"We have been working aggressively to implement changes to our ethics policies and procedures," said Dan Beck. "Hopefully, the suspension will be lifted soon."